Japan Crisis vs U.S. Crisis

In Japan, from 1981 to 1991 Japan saw a huge increase in real estate value. Japanese commercial real estate became the most expensive in the world. Then the bubble burst.

Richard Katz, writing in "Foreign Affairs (Vol 88 No 2) tells of the "bust" and how that Japanese banks didn't have enough capital to charge off their loans. The Japanese government delayed, denied, and failed to act for 9 years, while their economy stagnated. Finally in 2007, the Japanese government decided to reduce it's interest rates from 8 to zero, and then used public money to recapitalize Japanese banks, and to initial ficscal stimulas measures.

What it took Japan 9 years to do, the United States, has done in less than 3 months. We can hope that strong and fast action, by the U.S. will cut the "economic recession" into a short term problem.

Now the government of the USA seems to recognize that what got us into this problem was bad policy, deregulation, and lax enforcement of the regulations we had. As Obama has repeated, "Bad policies, deregulation, and poor governance created this situation. Better policies, re-regulation, and good governance can repair it."